Governance at Hellaby

The Board has statutory responsibility for the affairs and activities of the Company, which in practice is achieved through delegation to the Chief Executive Officer, who together with his senior managers and the chief executives of Hellaby’s subsidiary companies, is charged with the day-to-day leadership and management of the Company. Where Hellaby is represented on the board of a company in which it is a shareholder its representative shall be accountable to the Hellaby Board as permitted by the rules of that company. The Chief Executive Officer manages and oversees the interfaces between the Company and its stakeholders and is the principal representative of the Company.

The Board has adopted the following governance principles recognised by the New Zealand Securities Commission and the Australian Stock Exchange Council:

1. To lay solid foundations for management and oversight.
2. To structure the Board to add value.
3. To promote ethical and responsible decision-making.
4. To safeguard the integrity of its financial reporting.
5. To make timely and balanced disclosure.
6. To respect the rights of its shareholders.
7. To recognise and manage risk.
8. To encourage enhanced performance.
9. To remunerate fairly and responsibly.
10. To recognise the legitimate interest of stakeholders.

The Role of the Board

The Board has the responsibility to protect and enhance the value of the assets of the Company and the interests of the Company and its shareholders.

Board Composition

Whilst the Constitution provides for a Board of at least three members, the Board has found that its responsibilities have been met with six members, including the Chief Executive Officer. The Board has determined that a majority of Directors including the Chairman must meet the independence requirements described below.

A director’s other commitments must not be such that they are likely to hinder his or her effective performance in the role.

The Board shall appoint a Chairman from among the Directors. The Chairman will be an independent non-executive director.

Rotation

Each year one third of the company’s directors, being the longest serving since their last election, shall retire by rotation. Retiring directors may, if eligible, offer themselves for re-election. There is no maximum term for a director. Only the Chief Executive may be an executive director. Directors shall be elected by the shareholders, except that where a casual vacancy on the Board arises the Board may make an appointment to fill that vacancy subject to the person so appointed offering him or herself for election at the first annual meeting after their appointment.

Independence

The Company’s policy is to have the Board comprised of a majority of independent directors. The Board assesses the independence of each director based on the following criteria:

First, the director shall continuously act in the best interests of the company and all its shareholders, and manifestly review and advise on the affairs of the company objectively and without influence from management.

Secondly, neither the director (except the Chief Executive) nor any of his or her immediate family shall be, or have been during the previous three years, an executive of Hellaby including its subsidiaries, or a senior employee of any of Hellaby’s external advisers or major clients or suppliers.

Thirdly, neither the director nor any of his immediate family or an associated person of the director shall have a material relationship (other than in his or her capacity as a director of Hellaby) with a substantial security holder of Hellaby or an associated person of a substantial security holder by virtue of which the Director or any associated person of the director is likely to derive, in Hellaby’s current financial year, 10% or more of his, her or its annual revenue during such financial year.

For the purposes of the definition of material relationship:

• “associated person” means a person who, as a result of an arrangement or relationship existing between the person and another person, could be influenced in exerting power or exercising a decision by the other person, and is further defined by the New Zealand Exchange Listing Rules.

• “executive officer” means any member of an executive team including the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and the Chief Executive Officer’s direct reports.

• “immediate family member” means the Director’s spouse, de-facto partner, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than employees) who shares the Director’s home except where the Board determines it appropriate that such person should not be regarded as an immediate family member.

• “material” is to be considered having regard to the materiality to Hellaby, the Director and the person or organisation with which the Director is a relation (e.g. the customer, supplier or adviser).

• “relationship” is to be interpreted broadly and includes indirect relationships and direct relationships such as employment and other contractual relationships.

• “substantial security holder” is a person who has a relevant interest in 5% or more of the voting securities of Hellaby.

Nomination

In accordance with the Rules of the NZX, nominations for election to the Board are invited from shareholders in advance of each Annual General Meeting. Such nominations will be reviewed by the Remuneration and Nominations Committee of the Board, whose recommendations are communicated to shareholders in the Order Paper for the Annual General Meeting.

The Committee is also responsible for recommending to the Board candidates to be put before shareholders for election to fill any vacancies which may arise, or which may be appointed by the Board to fill such vacancies pending election at the following Annual General Meeting. To be eligible for selection candidates must demonstrate appropriate qualities and experience, and meet the certification requirements of any Stock Exchange on which the Company is listed.

In carrying out its functions the Committee will arrange for a comparative search and evaluation process to be undertaken, with appropriate interviews of candidates. Final appointments or recommendations to shareholders shall be made by the Board itself. The Committee and the Board shall have regard to a range of factors including the mix of skills and experience required on the Board, and the independence, qualifications and experience of the candidates.

Induction

All new directors shall receive copies of this Charter, the Charters of all Committees, recent Board and Committee papers, recent Board minutes and relevant Company policies. In addition the Chief Executive shall arrange for them to be introduced to the senior management of each of Hellaby’s operating subsidiaries and to be briefed on their commercial activities, and the markets and economic environment in which they operate.

Continuous Education

All Directors are expected to pursue continuous education in the disciplines of corporate governance and in the business areas in which Hellaby operates to ensure that they may appropriately and effectively perform their duties.

The Company Secretary, who is appointed by the Board as a whole, is accountable to the Board on all governance matters. The Company Secretary monitors compliance with Board policy and procedures, and ensures timely completion and despatch of the Board agenda and financial reports. All Directors have access to the Company Secretary.

Committees established by the Board operate within specific terms of reference established by the Board in their Charters. Committees do not take action or make decisions on behalf of the Board unless specifically mandated by prior Board authority to do so.

The current Committees of the Board are the Audit and Risk Committee and the Remuneration and Nominations Committee. Their charters are reviewed annually by the Board. From time-to-time the Board may create ad hoc or other committees to examine or deal with specific issues on behalf of the Board under delegated authority.

Committee Chairpersons and members are appointed by the Board.

The performance of each Committee shall be reviewed annually by the Board to ensure that each Committee is operating consistently with its Charter.

Board Materials and Presentations

The Chairperson of the Board communicates with the Chief Executive Officer prior to each Board meeting to discuss the agenda for the forthcoming Board Meeting. Each Director is able to suggest agenda items.

To enable appropriate review of Board materials, Directors shall normally receive materials approximately five days in advance of meetings, except in the case of special meetings where urgency may dictate a shorter period. Written reports may be supplemented by presentations on specific subjects at Board meetings, and the Chief Executive is free to invite members of management to participate in the discussion of specific items with which they are associated.

The Board will normally meet at least eight times a year. To the extent practicable, Hellaby will hold at least two Board meetings per year at the premises of a subsidiary.

The Board may choose to meet without management present.

Relationship between the Chairperson and the Chief Executive Officer

The Chief Executive may not be the Chairman of the Board. The Chairman’s role is to manage and lead the Board effectively, and to be the Board’s primary channel of communication with the Chief Executive. However, all directors are free to communicate directly with the Chief Executive, and provided the Chief Executive is informed, with other senior managers of the company and its subsidiaries.

Remuneration of Directors

Directors are remunerated by way of an annual fee, paid quarterly. The total amount which may be paid as directors’ fees each year is determined by shareholders. It is customary for the Chairman to receive a higher fee than other directors to reflect the additional responsibilities of the position. The Board may determine that additional allowances (subject to a maximum of NZ$100,000) be paid to a Director, as appropriate, where, at the Board’s request, additional services are provided to the Company by that Director.

Reimbursement of Directors’ Expenses

In summary, the Company meets the cost of:

• all Directors’ travel directly associated with attendance at Board and Committee meetings, Board trips and Board business;
• any costs associated with a Director’s attendance at functions where the Director is representing the Company;
• any travel costs directly associated with a Director’s spouse/partner’s attendance at functions where their attendance is considered appropriate; and
• any costs directly associated with the Director’s performance of his or her role.

All Directors’ expenses are approved by the Chairman. The Chairman’s expenses are approved by the Chairman of the Audit and Risk Committee.

Remuneration of Chief Executive Officer

The Chief Executive Officer’s remuneration is established in his or her employment contract with the company, and comprise a base salary, and, at the Board’s discretion, incentive payments to reward short and long term performance relative to agreed performance indicators. Where the Chief Executive is also a director of the company, shareholder approval of his or her total remuneration is required in terms of the NZX Rules.

Conflicts of Interest

Directors are required to minimise the possibility of conflict of interest with Hellaby by restricting their involvement in businesses where a conflict of interest could arise. All business interests are required to be disclosed in the company’s Interest Register. Where a conflict of interest arises the director shall immediately inform the Chairman who shall determine the appropriate action to be taken to deal with the conflict. Such action will be in accordance with any NZX Rules governing such conflict, and may include withdrawal by the Director from any Board discussion or decisions on the matter at issue.

The Company maintains an Interests Register.

Trading in Hellaby Securities

Directors are subject to limitations on their ability to deal in Hellaby securities by Hellaby’s Code of Conduct for Securities Trading and the New Zealand Securities Market Act 1988. These limitations include the requirement that Directors may not deal in Hellaby securities or the securities of another issuer while in possession of inside information about that entity.

As a matter of policy, Hellaby also requires that prior to dealing in Hellaby securities consent must be obtained from the Chairperson and that trading may only occur within the periods specified in Hellaby’s Code of Conduct for Securities Trading.

All changes in the security holdings of Directors are required to be reported to the Board and the New Zealand Stock Exchange.

Policy and Corporate Strategy

The Board is responsible for the approval of appropriate corporate strategies with particular regard to portfolio composition and return expectations, including the approval of transactions relating to acquisitions and divestments, capital expenditure above delegated authority limits, dividend policy and the review of performance against strategic objectives. The Board also approves and monitors the Company’s financial and other reporting.

Every year, the Board reviews and approves the corporate plan and the capital expenditure and operating budget for the Company for the forthcoming year.

The Board is also engaged actively and continuously in strategic planning and the ongoing assessment of business opportunities and risks and is also responsible for the oversight of the Company’s control and accountability systems.

The Board annually receives a representation from the Chief Executive Officer and Chief Financial Officer that:

The Board is responsible for regular review of:

The Board is responsible for appointing and removing the Chief Executive Officer and for ratifying the appointment and removal of the Chief Financial Officer, the Chief Operating Officer and the Chief Executive Officers of Hellaby’s operating subsidiaries.

Waivers from the Code of Conduct may only be granted by the Hellaby Remuneration and Nominations Committee.

Evaluation of the Chief Executive Officer and Management Succession Planning

The Remuneration and Nominations Committee evaluates the performance of the Chief Executive Officer and oversees the Chief Executive Officer’s evaluation of his or her direct reports. It also recommends the annual remuneration of the Chief Executive Officer to the Board for approval and approves the remuneration of the Chief Executive officer’s direct reports. The evaluation is based on criteria set by the Committee which include the performance of the business, the accomplishment of long-term strategic objectives and other non-quantitative objectives agreed at the beginning of each year.

The Remuneration and Nominations Committee meets to discuss the Chief Executive Officer’s performance and remuneration. The Chairman then meets with the Chief Executive Officer to discuss the Chief Executive Officer’s performance and to provide counsel to the Chief Executive Officer.

The Chief Executive Officer reports annually to the Board regarding management and Chief Executive Officer succession planning and management development. In the event of an emergency or the retirement of the Chief Executive Officer, the Remuneration and Nominations Committee will recommend suitable candidates to the Board for appointment to the position of Chief Executive Officer.

Delegation of Authority to the Chief Executive Officer

The formulation and implementation of policies and reporting procedures for management, other than as referred to above, is delegated to the Chief Executive Officer and certain subsidiary companies in terms of authorities determined by the Board which set limits on expenditure and certain decision making, and specify specific accountabilities. The Board monitors those delegations as part of the formal business of each Board meeting. The Board will periodically review and approve delegated authorities.

Independent Advice

A Committee or individual Director may retain and consult with external advisors (including legal) at the Company’s expense where the Committee or individual deems it necessary to carry out its, his or her functions. The Director or Committee shall inform the Chairman of the Board and the Chief Executive of this action, and the outcome of the consultation or advice shall be reported to the Board.

Non-executive Directors are not employees of Hellaby. Non-executive Directors are entitled to rely on Hellaby executives in relation to matters within their responsibility and area of expertise and may assume the accuracy of information provided by such persons, so long as the Director is not aware of any reasonable grounds upon which such reliance or assumption may be inappropriate.

The Board may rely upon information provided by Board Committees and their members in relation to matters within that Board Committee’s delegated responsibility, provided that it has evaluated the information and is not aware of any reasonable basis upon which to question its accuracy.

Evaluation of Board Performance

The Chairperson will meet regularly with Directors to discuss individual performance of the Directors. The Remuneration and Nominations Committee reviews the remuneration of Directors based on criteria developed by that Committee. The Board reviews its performance as a whole on an annual basis.

General

This Board Charter has been approved by the Board and is reviewed annually by the Board.